How prudent donors can follow their dollars
Accountability means treating a gift as an investment to ensure a quality return.
With an eye on their dwindling investment-account balances, Americans are making end-of-year charitable donations expecting greater accountability, philanthropy watchdogs say.
鈥淧eople want to do something meaningful,鈥� says Bob Ottenhoff, president and CEO of GuideStar, a nonprofit dedicated to helping donors make prudent gifts. 鈥淭he mindset changed from, 鈥楬ere鈥檚 a donation because you are a nice person doing nice things,鈥� to 鈥業鈥檓 a person making an investment in your organization and expect results.鈥� 鈥�
Yet despite this desire for accountability, Mr. Ottenhoff and others say, too few donors do any legwork to safeguard their donations. Many simply respond to charitable solicitations, rather than seek out charities to support, which can leave them vulnerable to scams or result in funding fiscally irresponsible nonprofits.
But with a little donation acumen, donors can vastly increase the likelihood that the gifts they make will reach the individuals they intend to benefit this holiday season.
In 2007, Americans donated $300 billion to charity; $200 billion was from individuals, Ottenhoff says.
Ensuring donated money goes to the right place begins with donors, says Daniel Borochoff, president and founder of the American Institute of Philanthropy, a charity watchdog group.
鈥淭hese are one-way transactions and a lot of people don鈥檛 put in the effort鈥�. If people would think a little bit, so much more could be accomplished,鈥� he says.
Ottenhoff says donors must first 鈥渞esist an urgent telephone [solicitation] or the mailing you get with sad looking pictures, or increasingly, e-mail.鈥�
Instead, they should ponder causes, and whether they wish to donate internationally, nationally, or locally, and to new or established organizations.
鈥淭hen, begin to look for organizations that fit your criteria,鈥� he says. 鈥淚f your interest is food banks in Boston, narrow it down to a few and make comparisons: How are they doing? Are they meeting their goals?鈥�
A donor should also search for consistency across a charity鈥檚 platforms, says Bennett Weiner, chief operating officer of the Wise Giving Alliance of the Better Business Bureau, which evaluates some 1,200 national charities.
鈥淭he audit and the 990 [tax form] should clearly match the activities described on the [charity鈥檚] website and in appeals. Any discrepancy alerts us that we should get additional information,鈥� he says.
Sometimes, a charity鈥檚 financial information can be onerous. Confusing issues range from a charity giving money to another group and then claiming credit for services the other is providing, Mr. Borochoff says, to funds appearing or disappearing due to account transfers.
Another watchdog, Charity Navigator, examines the financial data of more than 5,300 US charities.
鈥淭he majority of organizations on our website are able to provide 70 percent of operating expenses to program services,鈥� says Mike Smith, Charity Navigator鈥檚 chief operating officer. Administrative and fundraising expenses round out much of the remaining 30 percent. 鈥淥rganizations where the number is upside down 鈥� 70 percent to fundraising and 30 percent to program 鈥� that鈥檚 an organization that鈥檚 not going to be using your money wisely,鈥� he says.
Any trustworthy charity will welcome questions about its mission, structure, and finances, says Genevieve Piturro, executive director of the Pajama Program, a New York-based organization that donates new pajamas and books to more than 513,000 children in foster care across the US.
鈥淲e have the 990 tax form on our website,鈥� Ms. Piturro says. 鈥淲e think it belongs there and people will use it.鈥�